Business groups urge high court to clarify ‘millionaires tax’

BOSTON — Business groups are urging the state’s highest court to set the wording of a proposed “millionaires tax” that goes before voters in November.

The referendum, which was cleared for the ballot by the Legislature, will ask Massachusetts voters to amend the state constitution to set a new 4% surtax on the portion of an individual’s annual income over $1 million. The money would be earmarked for transportation and education projects.

A complaint filed in January by the Massachusetts High Technology Council and representatives for other pro-business groups argues that backers of the surtax may try to mislead voters by using an “inaccurate” summary of the referendum that claims the money will be devoted solely for education and transportation.

Opponents of the measure have asked the high court to decide how the question can be presented to voters and want justices to require that a summary of the ballot question for voters include a caveat that the state Legislature might chose to spend the money for purposes other than education and transportation.

“For voters to have accurate information on the consequences of their vote on the amendment, they would need to be informed of the downside of designated spending from income tax funds when voting on the proposed amendment,” lawyers for the Beacon Hill Institute wrote in a legal brief filed Tuesday. “But they are not.”

The lawsuit names Attorney General Maura Healey, whose office hasn’t yet released the final wording and proposed summary of the ballot question.

Healey wrote in a brief that the constitution doesn’t require a summary of the ballot question to be an analysis of the referendum, only that it be “fair and concise.”

“Any attempt to insert interpretation of a measure or analysis of its possible application to future factual scenarios could result in a challenge that the Attorney General is advocating either for or against the proposed law, not summarizing it in an accurate and neutral manner,” Healey wrote in the 72-page amicus brief.

The Massachusetts Taxpayers Foundation, Pioneer Institute and Greater Boston Chamber of Commerce are among those who have signed onto the lawsuit.

Opponents have argued the proposed excise will hurt businesses, drive away the wealthy and put a drag on the state’s economy as it recovers from the pandemic.

They say the new surcharge would impact smaller employers whose personal finances are tied to their business operations — not just multimillionaires — and point out that Massachusetts voters have several times rejected proposals to replace the state’s personal income tax with a graduated rate.

But Raise Up Massachusetts, a coalition of unions, faith groups and community organizations backing the referendum, argues that the state’s top earners can afford to dig deeper into their pockets to help pay for education and transportation needs.

Steve Crawford, the group’s spokesman, dismissed the arguments by business groups and accused them of spending “hundreds of thousands of dollars hiring lawyers to protect their wealth and block voters from having a voice this November.”

Beth Kontos, president of the Massachusetts chapter of the American Federation of Teachers, also criticized the opposition from business groups, saying it is “upsetting that the top priority of these business groups is protecting the immense wealth of their CEOs and investors who have gotten even richer during COVID.”

“Instead of spending hundreds of thousands of dollars on high-priced lawyers to silence the voice of Massachusetts voters, the ultra-rich should pay their fair share to help our students recover and build an economy that works for the rest of us,” she said in a statement.

The SJC has scheduled a May 4 hearing at the John Adams Courthouse in Boston for oral arguments in the legal challenge.